The New Rules of Indie Hacking Through A Recession

3 min read

Channing Allen wrote earlier this month how the economic downturn that we’re facing might end up producing more Indie Hackers—a sentiment that I wholeheartedly agree with. I think there’s ultimately two scenarios that will fuel this fire:

  • You got laid off and suddenly find yourself with the time you never had before to bring your own business or side project to life.
  • You now recognize that working for someone else is actually a lot less stable and can be riskier in many ways than working for yourself.

Regardless of which scenario best describes you, it’s also entirely possible that your foray into Indie Hacking is driven largely by necessity. It’s a tough time to find a job, and with your back against the wall you might be somewhat forced into creating your own living—that’s not necessarily a bad thing! It’s amazing how people can innovate when they’re forced to.

As Channing’s post highlights, even many prominent VCs are admitting that now might not be the best time to head down the venture backed path—and I think all the layoffs and turmoil that the tech industry is experiencing is evidence that even in good times we haven’t been thinking about building companies the right way anyways. I’ve come to believe that there are only two scenarios where it undeniably makes sense to raise venture capital:

  • You’re building something so capital intensive that it can’t possibly be built without massive amounts of money. Think SpaceX. You’re not building rockets to send into space with your savings.
  • You’ve built a successful business and have a repeatable customer acquisition process that you’ve already demonstrated can scale with access to more capital. The only thing holding you back is more money to fuel growth. On top of that, maximizing the growth potential of your business is your top motivation and your goals are aligned with the commitments that come with raising venture capital.

If this first scenario describes you, you’re not indie hacking. If the second describes you, well done—venture capital may very well make sense for you. In all other instances, now is a great time to launch your business with a focus on profitability from day one. This post outlines the “new” rules of Indie Hacking that you should consider as you plan out your strategy for Indie Hacking your way through the recession that lies ahead. 

Do I sell services or SaaS?

If you’ve recently been laid off, first and foremost I’m sorry—that sucks, and I’ve been there myself. Few things will amplify the imposter syndrome you may have already been feeling more than getting laid off.

The good news is this—if you were gainfully employed at a tech company, you already have valuable skills that you can trade for money. Getting laid off in no way changes that; you’re much more ready and able to build the next stage of your career as an Indie Hacker than you may think!

One of the first decisions you’ll face is a simple one—what type of business will I build? How will I make money as an Indie Hacker?

That’s only a decision that you can make, and is one that will be influenced by factors such as your skills, interests, and the urgency that you have to start bringing in income. Generally speaking, building a software product—even a minimum viable product—is going to take more effort and time than selling your skills as services. But software products are more scalable and valuable, so if you have the financial runway and the time to start building now is as good a time as any.

If cash flow is an immediate concern, consider selling your services. While it may be more challenging to find full-time employment at the moment, with the economic downturn comes opportunity. Entrepreneurs spend countless hours trying to time markets and figure out where market opportunities lie, but there’s some obvious ones in light of all that’s going on in the world right now.

Say for example you’re a designer that was previously making $80,000 per year before you were laid off. Your former employer—and other companies like them—might not be able to afford your full-time salary at the moment, but that doesn’t mean that they’re pausing all design work altogether. They need to continue to operate as close to normally as possible, just with significantly reduced overhead—that’s where you come in. Instead of a full-time role, consider selling companies on a $2,000 per month retainer that allows them to use you for a set number of designs each month. Entire agencies, like Design Pickle, use a similar model. An $80,000 per year employee ends up costing a company well north of $100,000 annually when you fold in salary and benefits, so you’re offering that company a solution to one of their needs for less than a quarter of their previous costs. 

As founders and leadership teams scramble to minimize the impact of the downturn on their businesses, I can assure you that most of their employees aren’t reaching out to them offering creative solutions to their problems. Proposing such an arrangement can position you as a team player, a creative thinker, and if you land similar contracts with just three or four companies you’ll be earning comparable money. 

When you work for yourself you can also build the advantages that you need into your business model because you call the shots—opt for offering your services on retainer basis in order to give yourself a bit more stability than you’d have selling contract based work. This setup can also benefit you because you’ll get to build relationships with a few companies at once as opposed to just one. If you do good work and prove yourself to be valuable, you may find yourself having multiple roles that you can choose from when the economy starts to improve—that is if you decide to go back to working for someone else.

Starting a services business is also a great way to bring in some cash and build runway while you start working on a productized software business. That’s the approach that we chose to keep ourselves financially afloat in the early stages of building Outseta.

Speed to market is the new name of the game

If you do decide to embark on building a software business, speed to market is the new name of the game. You need to get a functional product out into the market so you can start to bring in revenue and reach profitability as quickly as possible.

A big part of this is scoping your MVP appropriately and iterating based on user feedback rather than building a perfect product that you’ve over architected in your own head, but there are tons of opportunities to improve speed to market beyond product scope.

For example, all SaaS products require the same table stakes functionality. You need to integrate Stripe with your product. You need to build a way to sign-up new users, then show them the appropriate version of your product based on their subscription. You’ll need to build lost password workflows, and user management features so your customers can change their subscriptions, invite team members, or update their credit card information. Every SaaS app needs these features—it’s in no way unique to your product and it’s certainly not “core” product functionality.

While it’s too often been the status quo for founders to build this stuff internally, why would you? All of this work taken collectively can take a few months to build, and none of it is going to directly generate revenue for your new start-up. You’re intentionally reducing your runway for some semblance of control that simply isn’t meaningful, particularly in the early day of a start-up. Instead, use the technology that’s available to you that can make your business relevant most quickly.

We all want to think that our product requirements are unique to us, but now isn’t the time to mince words—your product isn’t nearly the special snowflake that you think it is. Platforms like Shopify have grown to the extent that they have (and are currently doing really well!) because they productize table stakes functions that all e-commerce stores require, helping founders get their products to market more quickly and efficiently.

SaaS is no different.

A final thought to chew on—those who get really good at speed to market can likely launch and validate multiple new products in the same time that it takes other founders to bring one product to market. Their secret? They’re not wasting time rolling their own solutions to problems thousands of other SaaS founders have already solved.

Build self-service payment functionality first

This may sound counterintuitive, but you should build your payment functionality as early as possible. The primary reason for this is simple—a recession is not the time to do a run-around when it comes to validating the idea for your start-up. Nothing validates a product concept as quickly as seeing that there’s an actual market of buyers who are willing to pay for your product.

While you can integrate Stripe directly with your product, most founders who go this route end up spending dozens of hours working with Stripe’s API. There are a number of Stripe Partners, Outseta included, that can instead help you integrate payments with your website and product in minutes. Don’t waste months building a product only to learn that there’s no willingness to pay. 

Beyond that, offering a self-checkout experience for your product or service brings you a step closer to the holy grail that all Indie Hackers are working towards—the day when you go to bed, then wake up to discover that you made money while you were asleep. Given that you can launch payment functionality in minutes, you’d be crazy not to use it to validate your idea as well as build natural scalability into your business.

Set clear expectations with customers

The transition that I’m advocating for with this post is as simple as changing from a “growth at all costs” mindset to a “profitability at all costs” mindset. That’s going to require some trade-offs, but the Indie Hackers who will thrive during the economic recession will be those that embrace these trade-offs as opportunities.

For example, in a growth at all costs world many companies built significantly sized customer service teams designed to respond to all incoming customer service requests within an hour. That’s great—everybody loves timely customer service—but in a downturn it might not be feasible to respond to issues so quickly.

I think most founders would be pleasantly surprised by how much proper expectation setting can help them—there’s absolutely nothing wrong with level setting with your customers by saying customer service requests will be answered via email in 24 or 48 hours. While more immediate phone or chat based support might be preferable, if you make it clear that this trade-off results in a lower price for your users I think you’ll find that most users understand your reasoning and actually appreciate the cost savings.

Define new, profitability-centric metrics

The real work in preparing yourself to Indie Hack your way through the recession is really embracing the profitability first mindset. And nothing goes further to rewire your thinking than changing up the metrics that you use to measure your business’ performance.

As I mentioned above, this may mean that you’re OK embracing a slower response time for customer service requests. From a marketing perspective, cost per lead might become more important than your overall volume of leads driving you to invest in low cost marketing channels like email prospecting, SEO, or content marketing instead of paid advertising or events. Payback period is more important than ever before—challenge yourself at every turn to see how quickly you can turn a profit. 

As your business starts to scale, consider using metrics like revenue per employee instead of top line growth rate to measure the overall health of your business. Using a metric like revenue per employee as your compass will have trickle down effects on aspects of your business like your sales strategy as well. For example, rather than running out to hire additional sales reps consider giving your existing sales team the opportunity to make more money by improving the efficiency of their sales process. If they show that they can “bend but not break” and learn to handle increased lead volume effectively, you can improve efficiency without increasing your overhead.  

Deliberately build for predictable, low software overhead

I hope this recession will finally put an end to all these posts and websites where founders share, with pride, the 50+ software tools they’ve used to build their business. 

These posts have always felt strange to me—I get that technologists love software and want to share some of the tools that they like with the world. But these posts all share a look-at-how-slick-i-am-optimizing-every-single-workflow-to-the-nth-degree sentiment that just seems a bit off to me. Shouldn’t we be celebrating efficiencies, not glut?

Two examples that I can’t shake from my head that are too good not to share:

  • One of the very best SaaS companies I know—with founders I deeply respect—recently showed me that they’re subscribing to both Marketo and Hubspot, paying about $50,000 annually for the two tools. When I asked why, the reason was an optimization so small it was laughable and had absolutely no impact on revenue. 
  • I recently came across a company doing $1M annually that was subscribed to Chart Mogul, Baremetrics, and Profitwell (all SaaS reporting tools). Seriously.

When I’ve called circumstances like these out to founders, the responses I’ve gotten have always been akin to, “Software is cheap. If each tool helps us make even one additional sale, it was totally worth it.” While I understand that sentiment, these are the same founders that are now racing to cut their software overhead to minimize human level carnage.  

The playbook for SaaS in terms of the software products you’ll need to operate your business is well understood. You’ll need a billing system to charge your customers. A CRM to store prospect and customer data. A help desk and email tools to communicate with your users. These are common denominators—you very much can and should plan to keep your overhead in these areas low. The more products you employ the more bills you’ll have to pay, the more integrations you’ll have to build, and the more technical debt you’ll have, too. And as you grow and jump through pricing tiers for all of those different products, your overhead will become anything but predictable.

At Outseta, we’ve designed our entire pricing strategy to combat this. You get access to all the tools you need to launch and scale your business, with subscription charges that are laughable ($29/mo) for the tools you get access too (our strategy is to just cover our costs with subscription charges). Instead, we take 1% of successfully processed payments so that we only make money when our customers make money. It’s a pricing model that’s built specifically for bootstrapping Indie Hackers, and you don’t need to share logins or pull off any other technical wizardry in order to save a few bucks—we’ve already removed the barriers to entry.

I’m bringin’ scrappy back

Software aside, the vast majority of overhead in software companies is tied up in employee salaries—but now you have revenue per employee as your North Star! Luckily, there’s never been a better or more cost effective time to hire freelancers. 

I personally have had relatively poor experiences hiring off of Fiverr, but I love Upwork and have hired there repeatedly with great success. Hiring off of sites like these is a skill in and of itself—Pat Walls wrote a good post on the process he uses to hire freelancers. There are tons of talented people that you can hire for the fraction of the price of a full-time employee—they’re just sitting there on the bench waiting for you to put them in the game.

Another option worth exploring, especially when it comes to hiring more experienced people is trading equity for professional services. We’ve also done this at Outseta, with our lead designer James who we could never have afforded to pay a market salary. Our product wouldn’t be anywhere near as good if it weren’t for James’ contributions to our team. 

Team up! Network effects are a case for Co-founders

Last but not least, while the image of an Indie Hacker sitting by themselves and coding their way to millions sounds romantic, it doesn’t happen all that often. Building a company—even one with a relatively simple product—is a significant endeavor. And sometimes it helps to have others on your team.

The benefits of having Co-founders are most often cited as bringing people with complementary skills together and having someone else to share in the highs and lows of entrepreneurship with. Both are absolutely true, but I think an unsung benefit of having Co-founders is network effects. Whether you’re hiring, marketing, or selling, your Co-founders know people that you don’t and have connections that will benefit your business. Your network is one of your greatest assets when building a start-up, and Co-founders are the ultimate cheat code for expanding the size and involvement of your network.

Too many founders get caught up in equity allocation, wanting to keep every last bit of ownership in their company for themselves. Your equity isn’t worth anything unless you actually build something of value—focus on the “build something of value” bit first, and the financial outcomes have a way of taking care of themselves. The same can’t be said the other way around. If teaming up expands your network meaningfully and improves your chances of success, start by finding yourself some co-conspirators.

Why we’re going “all-in” at Outseta

With all of the aforementioned tips in mind, I want to be transparent with the impetus for this post. For the past 3.5 years as we’ve been building Outseta, the primary messages that we’ve used for headlines on our website have been:

  • Grow your SaaS start-up, not your overhead
  • Launch your SaaS start-up 50% faster with Outseta and Stripe

The first headline focuses on doing more with less—we’ve used it to point out that SaaS companies have become quite gluttonous with their software consumption and most are running anything but a “lean” start-up when it comes to the software tools that they employ. I started transitioning away from this message as our primary headline in late 2019, because I felt it over-emphasized cost savings as opposed to the value Outseta delivers.

The second headline is all about speed to market—we’ve consistently heard that SaaS founders are spending a considerable amount of time integrating Stripe with their products and wished there was a simpler solution. So we decided to attack this pain point.

In the wake of COVID—19 one thing I’ve been struggling with is that both of these messages suddenly feel a bit... opportunistic. While we’ve been using these headlines for years now, the worst thing you can do as a marketer these days is come off as trying to take advantage of the circumstances. 

With this challenge in mind, I reached out to a number of advisors, confidants, and other SaaS founders over the past few weeks to discuss our messaging and how it jives (or doesn’t) with the environment we find ourselves in today. To my surprise, the guidance I’ve received has been unanimous…

“You’re being helpful. This is your moment, own it. Go all in!”

So with that as a backdrop, yes, we’re going full-steam ahead espousing the strategies that we’ve been pushing for the past three years. Outseta is a tool that’s uniquely suited to help new Indie Hackers build their companies through the recession, and we’re out to help as many new founders build low overhead businesses as possible. 


The tips in this article are really about cutting through the bullshit and getting down to the work of building a profitable business from day one—few industries outside of SaaS have lost track of such basic business principles. While it’s unfortunate that COVID—19 has been the catalyst for such discussions, I’m hopeful that it will lead to a new generation of Indie Hackers that don’t blindly follow the Silicon Valley approach to building businesses. 

Speed to market, low overhead, and a new mindset are the weapons that this next generation of successful Indie Hackers will wield. The only question now is simple—will you be one of them

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